Strategies for Building Wealth Through Real Estate Investments

Do one thing: If an offer sounds too good to be true, it probably is. Before you jump into any investment, it’s smart to do your research and consider potential drawbacks.

Real Estate Remains a Popular Investment

If you have spent any time changing channels only to find yourself drawn into a TV series about flipping houses for a profit, you get the appeal. Real estate, with its potential for long-term rental income, is a popular and tangible investment choice that often spans generations and income levels.  

Gallup Survey Results

In fact, for 12 years in a row, U.S. adults have selected real estate as the best investment option – over stocks, CDs, and even gold – according to annual surveys conducted by global analytics firm Gallup. 

When it comes to their favorite investment strategy, in its April 2025 poll of 1,006 adults, they selected the following:

• 37% Real estate
• 23% Gold
• 16% Stocks
• 13% Savings accounts or CDs
• 5%  Bonds
• 4% Cryptocurrency

Real estate, notes Gallup, has ranked as the top investment for Americans each year since 2014, with between 30% and 45% of those surveyed selecting it. If you are interested in growing wealth through investing in property, here’s a primer to help pave the way.

Real Estate Hedge Against Inflation

Certified financial planner Kirk Reagan, owner of High Flight Financial LLC, says real estate can provide a natural hedge against inflation, as rents and property values tend to rise with costs. “It also diversifies your investment portfolio,” he explains, “as property values don’t always move in sync with the stock market, which helps smooth out long-term returns.”

Real Estate Investing Basics

Before jumping into specific strategies, it’s important to understand the fundamentals of real estate investment, according to Randall Weaver, CPA, a partner with Trout CPA in Lancaster, Pennsylvania.

Real Estate Investing Process

Real estate investing often involves the following:

• Purchase of property
• Property management
• Sale or Rental of property for profit

Types of Real Estate Investments

The array of real estate investments you may want to consider includes: 

• Commercial property: Office buildings, warehouses, retail spaces, etc.
• Multifamily property: Apartment complexes, duplexes, and triplexes.
• Residential property: Condos, vacation homes, single-family properties, and townhouses.

Real Estate Investment Income

Once you own a property (or piece of one), real estate investments generate income, explains Weaver, through two primary sources.

• First, rental income, which comes from leasing or renting out a property.
• Second, appreciation, which is the potential increase in a property’s value over time.  
• Investors may also benefit from tax advantages, Weaver says, such as deductions for mortgage interest, property taxes, and depreciation.

To figure out the best strategy for your situation, it’s important to have a good idea of how much you can afford, your risk tolerance, and other factors. 

Fix it and Flip it

HGTV and other networks have been highlighting this type of real estate investment plan for years. The fix-it-and-flip-it strategy involves

• Buying a fixer-upper (preferably at a reduced price).
• Renovating the property can be achieved through “sweat equity” or hiring a contractor.
• Potentially selling it for a profit.

While this approach can be lucrative, explains Weaver, it requires significant time, effort, and expertise in renovation costs and market trends. (Reno tip: To reduce costs even more, some people live in a house while they renovate it.)

“For beginners,” he says, “fix and flip may carry higher risks, especially if you’re unfamiliar with the real estate market or construction costs. However, with the right team of contractors and advisors, it can be a profitable venture.”

House Hacking

House hacking is a term that means living in one part of a multifamily property – say a duplex – and then renting out the other side so the rental income helps to cover your house note. This can be a great way for first-time investors to enter the real estate market.

For the strategy to be successful, though,

• You must have the means to purchase the property upfront.
• Be able to foot the entire mortgage when you are between paying tenants. 

A less expensive version of house hacking involves two or more people buying a property together to live in and then splitting the costs of all expenses. 

Real Estate Investment Trusts (REITs)

If you want to test the waters of real estate investing without the headache of being a landlord or property manager, then Real Estate Investment Trusts (REITs) could be a good option, says Weaver. REITs are companies that own and operate income-generating real estate.

When you invest in an REIT,

• You can earn a share of the income produced through properties such as commercial buildings and shopping malls.
• Without the hassle of buying or managing the entire property.
• REITs are traded like stocks, making them easier to sell than traditional real estate investments. 

The Bottom Line on Real Estate Investments

While investing in real estate has the potential to be profitable, it can also be a pain in the neck. In 2023, Zillow conducted a survey of residential real estate investors in the U.S., asking landlords about dozens of aspects of their business. Among the results: 

• 92% noted that repairs (or maintenance) were among the most burdensome parts of managing their rental property.
• 36% said that managing the rental was more time-consuming than they expected.

“Real estate investing offers a proven way to build long-term wealth,” says Weaver, “but requires careful planning, market research, and a solid understanding of financial and tax considerations. For beginners, starting with simple strategies like buy-and-hold or house hacking can provide valuable experience while minimizing risk.”

With reporting by Casandra Andrews